Shares cash-in blow for children

Bradford & Bingley has issued share certificates to children that stockbrokers are refusing to accept as authority to sell. Children under 18 cannot own shares in their own name and the blunder is a big embarrassment to the new bank. It won praise last year for being the first demutualising building society giving windfall shares to children who had savings accounts with it.

More than 130,000 received 250 shares, the same windfall that adult members received. But if share certificates were requested, they were made out in the name of the child. Many investors asked for certificates because it allowed them to sell their shares by any means, rather than through Bradford & Bingley's postal dealing service.

He says: 'Children do not have a legal right to enter into contracts such as selling shares. I would have expected the shares to be issued in the names of the parents or other legal guardians as nominees for the children. This is the way it was handled in the big privatisation issues of the Eighties when shares could be bought for children.'

Over the past week, Financial Mail on Sunday has learned of a number of cases where parents have run into difficulties with stockbrokers when they have tried to sell Bradford & Bingley shares held in the names of their children. Others have managed to sell, but the deal has later been rescinded.

One reader from Ayr who does not want to be named says: 'My wife and I and our two children qualified for 250 shares each. We decided to ask for share certificates because we could then determine ourselves when we wanted to turn our windfalls into cash.

'When the certificates were received, I was surprised that the shares for the children were in their names only. I managed to sell the shares in one transaction at 259p a share, and told my stockbroker that 500 of the shares were in my children's names.

'Everything seemed fine, but then my broker contacted me to say my children's shares could not be sold because they were made out in their names only and they would have to be bought back at the prevailing price of 277p. I have been hit twice. I can't sell the shares and now I've ended up with fewer than I started with.'

Ian Carbarns, a 39-year-old pharmaceuticals worker from Holmes Chapel, Cheshire, has had similar problems. He and his wife Deborah, 31, and daughters Heather, 8, and Amy, 7, each received 250 Bradford & Bingley shares.

Ian asked for share certificates because, like the reader from Ayr, he wanted to decide when and how to sell. But when it came to carrying out the transaction, he got nowhere. 'I was left totally confused', Ian says. 'I was given a barrage of explanations as to why I could not sell the shares. One bank told me that children cannot own shares and that it was illegal to have shares made out in the name of a child.

'Another told me that the children's shares could not be sold until they were 18, while another had no idea what to do.'

Ian has yet to sell the shares. A spokesman for Bradford & Bingley says he is surprised at the problems that parents have faced trying to sell the shares.

'It seems that some brokers are taking an ultra-cautious view,' he says. But he admits: 'Technically speaking, if a share certificate-holder is a minor, any contract between them and a broker can be made void.'

He refuses to say how many share certificates have been sent to children.

The spokesman advises parents who have had problems to phone Bradford & Bingley's registrars, Computershare, on 0870 703 0003. He says that the children's shares would originally have been held in nominee accounts, but transferred out so that certificates could be issued.

As long as the children are UK residents, parents may request Computershare to put their holdings back into nominee accounts.

The shares, he says, may then be sold through Bradford & Bingley's postal dealing service at a minimum charge of £15.